Banks, Gov’t Strike $25B Deal in Foreclosure Fraud Settlement

Posted on Feb 9, 2012

Attorney General Eric Holder, center, accompanied by HUD Secretary Shaun Donovan, right, Iowa Attorney General Tom Miller, and other federal and state officials announces a settlement regarding mortgage loan servicing and foreclosure abuse at the Justice Department in Washington on Thursday.

On Thursday, state and federal government representatives announced that five major banks—Wells Fargo, Bank of America, Ally Financial, Citigroup and JPMorgan Chase—had agreed to pay their part in a settlement of more than $25 billion stemming from the mortgage market meltdown that caused millions of Americans to lose their homes and sent the economy into a near-death spiral. U.S. Attorney General Eric Holder called the settlement the largest of its kind.

Here are some details of the big deal. Is it too little, too late? —KA

The Washington Post:

Under the terms of the deal, banks would have three years to complete principal writedowns, refinancings and other relief. But officials said they structured the deal so that it provides incentives for actions taken within the first 12 months, in an effort to get aid to homeowners sooner rather than later.

The settlement also includes about $17 billion that would go toward foreclosure-prevention measures, such as lowering the loan balance for borrowers who owe more than their homes are worth. Banks would be given varying “credits” for different ways in which they write off existing debts.

Other provisions would provide for lowering interest rates for homeowners who are current on their loans. In addition, as many as 750,000 borrowers who lost their homes to foreclosure since 2008 would be eligible for payouts of about $2,000 each, without surrendering the right to join future lawsuits, state officials said.

Just a drip drop in the bucket. But it sets a bad presidence, as far as trust is concerned.

Trust will not be restored with half measures, and false promises. But then it doesn’t
really matter, as we are heading once again into stormy seas. Things are about to get
very nasty. This time will be much worse.

Maddow had Eric Schneiderman on tonight to present a defense of the current settlement. It was at least semi-credible in that the settlement appears to cover only post-collapse activity (e.g., robo-signing) and even in those cases does not immunize the banks from suits by individual homeowners.

The catch, of course, is that it leaves the vast bulk of the potential litigation (fraud, other criminal behavior, etc.) for later. A cynic (which when it comes to Obama I certainly qualify as) would suggest that this is therefore just a sop offered to bolster his prospects for reelection with tacit assurance to the banksters (something he’s done in the past, e.g., with the health-insurance, hospital, and pharmaceutical industries) that no substantive additional litigation would occur.

So while it’s not nearly as cut-and dried as letting the banks off with a $25 billion slap on the wrist plus $2000 per homeowner, it’s also hardly the major substantive actions that many have been calling for. Tune in next Obama-time, Obama-channel, for the next exciting installment.

1st -(forgive the caps) QUIT FUCKING BLAMING PRESIDENT OBAMA FOR THIS. Please try to focus on the real issue here: The banks, no matter who the president is/was/will be never had, has or will have any power over the banks….not prosecuting them or in any real way punishing them. Please try to stay on topic.

3rd - Just remember, this is all a natural and logical outcome of believing in the “free market,” of allowing people to repeat the same lies over and over again about “over regulation” and my favorite, “borrowers can’t be given help because it would be a fucking moral hazard.” People listen to this baloney, vote representatives who vote against the interests of regular folk and make the banks more powerful than ever…....This is not the president’s fault. The American people are to blame. In many ways the bankers know just how stupid we are…..................and act accordingly.

I can’t wait to hear how Obama apologists will try to explain this away….the playing Chess theory they like to throw out there doesn’t hold water at this point.

What a complete travesty. Another election looming to choose between what has turned out to be moderate lite at best and simply dreadful maybe just left of Hitler bad. Wonderful. What is stunning, and slam dunk proof that the loony 2012 righties are nut jobs, is them still referring to Obama as a socialist…if only!

Yep, it should be quite the occupy spring on Wall Street and elsewhere.

Band aid on a gunshot wound. Period. Why doesn’t the President just sign a moratorium (which he has the power to do) on ALL foreclosures. Prosecute the guilty bankers and lenders (to send a strong message) and make every mortgage affordable, without exception, and place those who’ve already been evicted back into homes with a mortgage they can afford. This is a joke, done only because an election year is approaching.

Let me put a little flesh on the bones of my last post with the following hypothetical example, one that I’ll bet you would not have to look far to find real examples.

I bought my house 15 years ago with a 30 year mortgage for $100,000. During the bubble, it’s value rose to $300,000, then during the bust, it dropped all the way down to $200,000. My equity in this house is $100,000 (current value minus the initial principle) PLUS the principle payments I made on my mortgage for 15 years, say $30,000. So my equity is $130,000, but I still have 15 years left to pay on my 30 year mortgage. I and my wife lose our jobs and miss 2 payments, initiating a foreclosure procedure that barrels along with the help of fraudulent methods by the lender and little real oversight by the courts, and the foreclosure is executed. I have lost my home, lost $130,000 in equity, and my credit is ruined, probably permanently. And this Obama settlement pays me $2,000.

I am entitled to reasonable restitution. But before the taxpayer needs to pick up the tab, the parties responsible need to make restitution out of their personal assets, until those assets run out, before they go to jail. The guy who said that $2,000 is “better than nothing” does not realize that in many cases, $2,000 IS nothing. Is this what Obama meant with his campaign slogan “Yes we can”? Can what? This is worse than Clinton’s “That depends on what the meaning of is is”.

Yup, it’s pretty much in our faces now, if you don’t like it too bad. They will do
what they want and get away with it. I swear the next term with Obama at the helm
again will finish the country for good. Civil unrest is on the menu.

The banks committed multiple felonies, even foreclosing on some homes with false information, ruining the lives of countless families, and they get off by paying $2000 per family? All people who lost their homes through false information should be 100% reimbursed for the value of their equity PLUS damages, and the responsible officers of those banks should be tried, and if guilty be incarcerated and made to pay restitution down to the last $100 of their personal assets. This is an outrage!

This is another Obamanation travesty. The actual amount coming from the banksters is a paltry $5 billion (over 3 years), the other $20 billion will come from us in the form of taxpayer guarantees and your 401k’s and mutual funds. Essentially Obamafraud is allowing the banksters to steal $180,000 in assets for $1800 (we stole your house, but here’s 2 months rent). It proves that his new “commission’s” chief job is to give the appearance of taking action while allowing all statutes of limitation to expire. Anyone still think its a coincidence that the day before this latest travesty was announced that Obamafraud wholeheartedly embraced SuperPAC’s, can you say quid pro quo??

This is another Obamanation travesty. The actual amount coming from the banksters is a paltry $5 billion (over 3 years), the other $20 billion will come from us in the form of taxpayer guarantees and your 401k’s and mutual funds. Essentially Obamafraud is allowing the banksters to steal $180,000 in assets for $1800 (we stole your house, but here’s 2 months rent). It proves that his new “commission’s” chief job is to give the appearance of taking action while allowing all statutes of limitation to expire.

Sounds very much like too little too late—but probably better than nothing. Why is it that those most in need always get the least help?

Please note—for what it might be worth—that Occupy has done more organized and successful work on the foreclosure problem than on any other urgent problem. With infinitessimally smaller resources they have helped to put the spotlight on the issue
and keep it there.